At times, state authorities put in place policies and measures that, despite goodwill, raise questions about their practicality, such as the ban on passengers riding in the cargo bed of pickup trucks during the Songkran festival. Some of them, which cause adverse impacts on various people, trigger controversy and a public outcry.
The latest controversy involves a plan by the Department of Energy Business under the Energy Ministry to increase the retail price of gasohol 91 to the same level as that of gasohol 95.
Gasohol 91 is 10% ethanol-blended petrol while gasohol 95 is petrol with a 5% ethanol mixture. The price of gasohol 95 is now 27 satang per litre higher than that of gasohol 91.
Soonruth Bunyamanee is deputy editor, Bangkok Post.
Witoon Kulcharoenwirat, the department director-general, said the initiative is aimed at boosting the sales of alternative fuel E20. He believed the higher price of gasohol 91 will force motorists to switch to the alternative fuel.
Some may think the 27-satang gap is not significant. That's right, but what is more important than the gap in prices is the impact of this policy.
According to Mr Witoon, the price measure should result in more consumption of locally produced ethanol and, at the same time, an accelerated phase-out of gasohol 91 -- initially scheduled for 2021.
His reason: A large number of cars are compatible with E20 fuel, but the consumption of this alternative fuel remains low. The consumption of gasohol 91 in October was 10.45 million litres year-on-year, down 0.9%, compared to that of gasohol 95 which increased 12.8% to 12 million litres.
Mr Witoon argues the figures indicate the trend shows more motorists have turned to gasohol 95 and, in his opinion, this makes it reasonable to remove gasohol 91 from the market. The new pricing will result in an early phase out. The plan will be proposed to the newly appointed Energy Minister Siri Jirapongphan for approval.
I do not agree with the plan.
If lower consumption of gasohol 91 is the reason for removing it from the market, as claimed by Mr Witoon, why does the department still keep E20 fuel on the market, since consumption of this type of fuel is only about five million litres per day? It is much lower than gasohol 91 consumption.
Who are the winners and losers from this policy?
I doubt if the Department of Energy Business knows how many motorists who own old cars will be affected by the policy.
The department said 2.7 million cars are compatible with E20, but less than one million cars use E20. Yet the department stopped short of mentioning the number of cars which are not compatible with E20.
I have no exact figure but believe there are millions of them. The department should show this information to the public to justify its policy.
It is certain the policy to phase out gasohol 91 from the market will affect millions of motorists with old cars that cannot use E20 because the higher concentration of ethanol in E20 will erode the rubber and plastic parts of vehicles that are not designed to accommodate the ethyl alcohol substance.
As a result, this policy will achieve nothing but force a large number of old car owners to pay a higher price for fuel or buy new cars.
Who will benefit from this policy? For sure, it will be ethanol producers, most of them capital-intensive business groups.
Oil companies are among those who will reap benefits from this policy since they will get a windfall from selling lower-cost fuel at higher prices. Due to the state subsidy, the marketing margin of E20 is considerably higher than gasohol 91 and 95. The new pricing policy will result in more sales of E20 -- and more profits for oil companies.
And if gasohol 91 is eventually removed from the market, the management costs of oil companies will fall, along with consumer choice.
The authorities may claim this policy will benefit farmers who supply agricultural produce to ethanol plants. This is doubtful. How much benefit farmers can reap from this policy? Can it be compared to the share ethanol producers will get?
As we know, farmers in this country are mostly exploited in the supply chain of farm products processing.
As far as motorists are concerned, none of them get to benefit from the policy. Those who prefer gasohol 95 to other fuel will not definitely switch to use E20 and those who prefer gasohol 91 will be likely to switch to gasohol 95, rather than E20, because the price of gasohol 91 is only 27 satang higher than gasohol 91.
Should assumptions about price-conscious behaviour always prove accurate, motorists who consume gasohol 91 should have switched to use E20 but they did not despite the fact the price of E20 is now 2.24 baht per litre lower than that of gasohol 91.
As a result, the department is probably assuming wrongly that most motorists who consume gasohol 91 would switch to E20 when the new price takes effect.
Not to mention the millions of old cars that are not compatible with E20.
They will be forced to use gasohol 95 or to bear the cost of modifying their cars to make them E20 compatible; or perhaps even buy new cars. Has the department prepared any compensation plan for them?
If the authorities really want to promote the use of E20, I think a pricing policy can help. Reduce the price of the fuel further to make consumers feel the difference compared to gasohol fuels. This is the right way to do it.
I personally see no benefit to this policy. It may stimulate the economy which will enrich big business operators, namely those in the ethanol manufacturing, and oil and car companies, at the expense of consumers.
It should be noted that when previous governments introduced different types of bio fuels, they wanted people to have more choices. This policy not only reduces people's choices but also increases their burden.
I don't know what the new energy minister will think about this issue, but if he approves the proposal, I suggest owners of old cars who are affected by this policy should exercise their rights by filing a class action lawsuit with the Administrative Court against the department and the ministry.
